1. Field of the Invention
The present embodiments of invention relate generally to import duties and taxes and systems for avoidance of same. Some embodiments of the invention particularly relate to sales, payment, management, legal and accounting systems for selling, using, conveying and financing of vehicles, goods and products to entities inside one country with duty-free status (such as individuals, partnerships, corporations, United Nations (UN), World Food Program (WFP), Non-Governmental Organizations (NGO), etc.) from suppliers, providers, distributors and/or manufacturers outside of the country (importers) (“parties”) and systems for avoidance of import taxes and duties from such transactions. Versions of the invention more particularly relate to computer-based devices, methods, processes and systems for the above-referenced transactions to produce useful, concrete and tangible results in the form of cash via tax and/or duty free leases/certificates to exempt importers from taxes normally levied by government taxation agencies. A Duty Free Synthetic Lease (DFSL) and Duty/Tax Free Certificate are also tangible results of the invention. Cash to the DFSL parties from the duty/tax savings is another tangible result of the invention. The DSFL is “synthetic” because it is not real but artificial. Versions of the invention may be used world-wide in at least one, some or any and all countries on all continents of the globe. Other embodiments of the invention include transactions within the same country and transactions outside the same country (export).
2. Description of the Related Art
As is well understood by one skilled in the art, for many years the global industry markets have had to deal with payment of taxes and/or duties to governments for importing goods and products such as aircrafts, motor vehicles, cars (automobiles), trucks, heavy equipment (cranes, bulldozers, backhoes, trenchers, excavators and the like), 4-wheel drive vehicles, motorcycles, 2-wheel drive vehicles, 1-wheel drive vehicles and all-wheel drive vehicles, portable buildings, trailers, etc. and all other usable vehicles, products and goods.
When the vehicles, products and goods arrive at a country's border, the main contact with the importers/owners/shippers is the government customs agent. This government customs agent inspects the products and goods to determine if they can be legally allowed into the country and to insure that import taxes and duties are paid on the vehicles, products and goods.
The import taxes and duties are then determined in relation to the value of the vehicles, products and goods at source. The importing country will then levy taxes and duties as determined by their import customs and excise policies and regulations (which vary widely from one country to another). These importing countries include, but are not limited to, United States of America, European Union countries, Canada, Central and South American countries, African countries, Asian countries, Middle Eastern countries and virtually all countries on all continents engaged in international trade. As is well known in the art, virtually all countries have “Trade Free Zones” and “Foreign Trade Zones” within the importing countries that contain bonded warehouses to store the imported vehicles/products/goods with “open title.” The title is left open from the manufacturer until title is transferred the importing entity after inspection and acceptance of the vehicles/products/goods by the importer. It is at the time of this title transfer that import taxes and duties are levied by the government of the host country.
In some countries (especially countries in Africa, for example) organizations such as the UN (United Nations), EU (European Union), diplomatic missions and certain NGO (Non Governmental Organizations) (herein referred to as “tax exempt entities” or “TEE”) are given tax and duty free status by the country on vehicles, goods and products the TEE import and legally own for the time the TEE use the vehicles/goods/products. Some countries allow churches, religious organizations, charities and other types of non-profit entities to obtain tax and duty free status and thus become a TEE.
When these goods have been used and there is a desire to dispose of the vehicles/goods/products the TEE faces two choices. 1) If they can identify a suitable tax free entity or individual the vehicles/goods/products may be sold tax free to the suitable tax free entity provided all the necessary Government documentation governing that specific country is filled out and processed. 2) The vehicles/goods/products may be sold to an individual or entity which does not enjoy tax free status. In this instance the duties and taxes are calculated at the original tax free value of the vehicles/goods/products less depreciation determined by each individual government and then paid by the TEE in full before the vehicles/goods/products may be legally transferred to the entity that does not enjoy tax free status.
Previously in the art, the above customary method reduced or prevented the tax exempt entity from enjoying the benefits of leasing or renting services. Since ownership of the vehicles/goods/products to be leased/rented by the TEE was with a tax paying individual/entity whose vehicles/goods/products had been purchased with full tax assessed; therefore it may be economically unviable for the TEE to make the higher monthly payments based on budget restraints.
Over the years, the sales, billing, payment, financing, legal and accounting methods, systems and devices for calculating import duties and import taxes have burdened the global industry providers with loss of profit to the providers in the form of these taxes. In the import industry, however, there currently exists no medium of commerce device, methods and systems for sales, payment, financing, leasing, using or transferring products and goods for avoiding import duties, import taxes and Value Added Taxes (VAT). This new, useful and unobvious Duty Free Synthetic Lease (DFSL) and Duty/Tax Free Certificate address the problems of the import/export industry.
For instance, as an example, it is understood by one of ordinary skill in the art that the prior related art is as follows: Importer receives a request from a duty free entity (end user) located in Africa, for example, to lease a vehicle from importer (Vehicle Provider). Under common practice, the importer would import the vehicle in the importer's (Vehicle Provider's) name on the title as the owner. The lease contract would be from the importer (as Vehicle Provider/owner) as lessor to the end user as lessee. (Alternately, a middle man or Dealer may be included in the lease as an intermediary). The end user then pays lease (or rent) payments to the importer (Vehicle Provider or or middle man) for use of the vehicle. This importation of the vehicle subjects the importer to import duty and excise duty. Value Added Tax (VAT) are assessed on the lease/rent payments charged by the importer as it is here that the importer has added value. The TEE can apply for VAT exemption from the government and once they obtain this exemption they then hand over the forms to the importer who can now claim back the VAT payments he made/would have made. Therefore the main source of savings via the DFSL is on the administrative work reduction and duty paid on the vehicles. The lower price of the vehicle because of the DFSL results in less money borrowed from a Bank (if Bank financing is needed), with resulting lower periodic payments (daily, weekly, monthly or yearly, but typically monthly). The lower price because of the DFSL is then recovered through the vehicle use payments on which bank interest is paid to recover the principle sum and bank charges. In Kenya, for example, without the DFSL these import duties and taxes may lead to a doubling in the value of the vehicles purchase price which is then passed on to the TEE before the invention of DFSL was made. The importer is also levied with VAT on the Value Added Services rental payments received as rental service income. Additionally the importer would have to pay Income Tax on the rental charges since they are income from the end user.
The tax exempt entity or individual (TEE) therefore indirectly pays the taxes and duties for the importer, sometimes making it economically prohibitive to lease or rent in the methods of the prior related art. Should the end user/renter still require the vehicle they will therefore pay taxes and duties to operate in their field of operations. Take for example the UN World Food Program as a TEE; prior to this invention if the TEE did lease/rent a car to help with distribution of food in Sudan it can be argued that they were being taxed indirectly to help the starving by lease of the vehicle i.e. the function of the vehicle remains the same either tax and duty paid or tax and duty free. This innovation offers such organizations to access the benefits of a lease/rental without the tax and duty penalties usually assessed. This assists the TEE in their operations to improve efficiency and effectiveness in the field.
This new and useful device, system and method address this age-old problem of imposition on and payment of the above-referenced taxes and duties by the importer by creating a Duty Free Synthetic Lease (DFSL) document package. The embodiments of this invention of transforming a taxable transaction into a non-taxable transaction and creation of the new, useful, unobvious, tangible and concrete Vehicle Use Agreement (VUA) and Duty/Tax Free Certificate is unique and entails an inventive step in the state-of-the-art of the import/export industry. Cash savings to the importer is another tangible and concrete result of versions of the invention.